Getting a credit card can be challenging if you have bad credit or no credit, but it’s far from impossible. And using credit wisely has the potential to help build or rebuild your credit.
What are credit cards for bad credit?
Credit cards for bad credit are aimed at serving people with a limited credit history or lower credit scores. Bad credit cards typically offer lower, more manageable credit limits, have lower eligibility criteria for applicants and have a higher APR than most credit cards. Some of these cards will approve you even if you’ve had a CCJ, default or bankruptcy in the past.
These cards are designed to encourage good borrowing practices. Some cards even increase their credit limits or lower their APR if you display the desired borrowing behaviour like keeping within your credit limit and making your monthly payments on time.
Knowing which cards will give you the highest chance of approval is key and will help you make the first step towards improving your credit score.
Can you get a credit card with bad credit in the UK?
Yes, it’s definitely possible. There are some additional pitfalls, however, that you must watch for when securing a credit card if you have poor credit.
While credit cards are often the source of a poor credit score, used properly a credit card can actually help repair a poor credit score. It can also help build credit if you have little or no credit history.
If your poor credit score is due to existing debt, use a credit card repayment calculator to determine how much cash is needed to pay off your balance in full.
How to pick the best credit cards for poor credit
You may feel pushed into a corner with not many options if you have no credit history or have a poor credit score, but you don’t have to feel that way. There is more variety than you would expect in the market.
Here are the criteria we used to sift through the cards for those with poor credit histories.
- A high chance of approval – Cards that have lower eligibility criteria and for which your application is more likely to be considered, even if you have had financial issues in the past or are on a low income or a student. This may mean you’ll get accepted despite a lower credit score, but it may even mean getting accepted despite having a CCJ, bankruptcy or default in your credit history.
- Potential to build credit over time – Cards that offer the chance to improve your credit score and potentially unlock further credit in the future. We gave extra points for cards that make this easier for you to do by providing you with your credit score on an ongoing basis, or using technology to help you monitor your spending.
- No annual fees – You shouldn’t have to pay fees just to increase your credit score. And let’s be honest, nobody likes paying an annual fee, full stop!
- Extra bonuses – Make no mistake about it, you’re not going to find rich rewards, sign-up bonuses or long 0% interest periods on bad credit credit cards. But some cards do offer some form of rewards or 0% period. Naturally we gave a ratings bump to cards that provide you the chance to build your credit and give you bonus features.
This certainly isn’t an exact science and the best bad credit credit card will be right for you if it fits your personal circumstances well. But we believe that cards that have a good mix of the above could be a good match for many people who have poor credit.
8 tips for applying for a credit card for bad credit
Here are eight tips to help you apply for a bad credit credit card:
1. Don’t apply for cards that are out of your reach
If you know you have a poor credit history, applying for credit cards that require good or even fair credit scores will lead to not only frustration, but will likely hurt your credit score further. Each credit card application that you make has the potential to lower your credit score. So applying for a card that’s out of reach may result in a rejection and make it even harder for you to get a card.
2. Don’t keep submitting several applications if you’re rejected
No matter what kind of card you applied for, if you apply for a credit card and get rejected… stop! Don’t rush to apply for another card, in hopes that the result that the outcome will be different. It may be different, and you may get approved for a different card (we hope you do!), but if you’re upset about being rejected and rush to submit another application, you may only risk damaging your credit score.
Instead, take a step back. First, consider whether you were applying for a card that required better credit than you currently have. On our site, every credit card has a slider that shows what level of credit is typically required. If you have poor credit, but have applied for a card that requires good credit, that could be your problem. You can also contact the card issuer and ask them why you were rejected. They may not give you super-specific feedback, but it could help you better consider why your application was rejected.
Once you’ve taken some time to consider why your application was rejected, you can start to look through other credit cards on the market to consider what cards are more likely to accept you.
3. Use eligibility checkers
It’s preferable that you do this from the very beginning, but if you’ve already applied for a card and been rejected, it’s not too late.
A credit card eligibility can help you find which cards you’re qualified for. It performs a ‘soft check’ to determine with a reasonable degree of likelihood whether you’d be accepted for the card. The good news about a ‘soft check’ is that it doesn’t hurt your credit, even if it returns bad news.
If you’re weighing your options and trying to figure out which card is right for you and which will accept you, then running through an eligibility check can help with this. If you’ve applied for a card already and been rejected, using an eligibility check is definitely recommended, as it could help you find a card that will (likely) approve you without further hurting your credit.
4. Be aware of the APR
Typically, cards designed for those with no credit history or a poor credit history carry a higher APR that other credit cards. However, within the market itself, there will be cards that sell themselves on having a comparatively low APR.
If you are looking to pay off your balance in full in each month, then you shouldn’t be caught out by the high interest charges. Most cards come with a standard 45- to 56-day interest-free period on purchases, provided you pay your balance in full.
However, if you are only able to make the minimum payment each month, do be aware of what APR the card carries and therefore what interest will be charged on your remaining balance. Please be careful here, as interest charges at these levels can add up very fast, and so carrying a balance should be a last option.
Also look for cards that offer the chance to reduce your APR over time if you display good borrowing practices. Similar to the idea of rewarding borrowers with increased credit limits, some cards will instead reduce your APR in stages provided you stay within your credit limit and pay your monthly balance.
Finally, be aware that the ‘Representative’ APRs that you see on The Motley Fool or elsewhere are the rates that 51% of applicants will get. You may think that the APRs on many credit-builder cards look sky high. But, believe it or not, the APRs can go higher. For a card with a Representative APR of 34.9%, for example, some applicants may be offered an APR of 59.9%. In this case, you may want to reconsider whether you really want that card, or at least be very very careful about carrying a balance on such a card.
5. Be careful of introductory 0% interest periods
If you are currently having financial or credit problems, then getting an introductory period of 0% interest, either for new purchases or for balance transfers, may sound great. The bad news is that poor credit credit cards rarely offer long 0% periods. The good news, however, is that some do offer 0% interest periods. These 0% periods won’t be long, but even a few months without interest could provide breathing space.
Now let’s say you did get approved for a credit-builder card with a 0% interest period. Great news, right? Yes. But be aware of exactly how long the introductory period is. If you do not pay off your balance in full before the end of the period you will be charged the card’s standard APR, and it could impact your credit score. That could get costly in multiple ways.
So if you do get a card with a 0% period, be sure to mark the end of that 0% period on your calendar, and be sure to have your balance paid down by then.
6. Look for free credit reports and other credit-building services
One of the best ways to improve your credit score is to know what is going on with it. Therefore, take note of cards that offers a free credit checking service. This would help you know your credit score and keep you informed of any changes.
Beyond that, some card issuers have services like text alerts and apps that are designed to help you stay on top of your spending and payments. If you’re serious about improving your credit, don’t ignore these features. Going over your credit limit or missing payments can be costly in terms of fees, but they can also hurt your credit score. So getting some extra help staying on top of things can be a real benefit.
7. Don’t ignore cashback or rewards
Just because you need a card with which to rebuild your credit doesn’t mean you need to miss out on the perks that credit cards can offer. While they are unlikely to give the biggest rewards on the market, there are cards for those with bad credit histories that have cashback offers, reward points programmes or no fees for foreign transactions.
Treat these like the extra bonuses that they are though. Don’t choose a card that provides store rewards if another card will give you a few months of 0% interest and will save you a lot of interest. We get it, saving on interest may not be as fun as earning rewards, but when you’re trying to get your credit and finances in order, being practical can really pay.
And, of course, don’t use rewards or cashback as a reason to spend. Spend responsibly, pay down your balances and let the rewards take care of themselves. Besides, if you focus first on building or repairing your credit, you may soon stand the chance at qualifying for cards that offer much better rewards!
8. Be diligent
Your credit score is not going to improve overnight, but try to keep in mind that it will get better if you follow responsible financial habits going forwards.
After about 12–18 months of paying your bill on time and keeping within your credit limit, you should see an improvement in your score. This may mean that you then become eligible to apply for another credit card that offers better benefits.
And don’t get discouraged. This process can take time, and if you’re patient with it, and do take on better financial habits, those habits can serve you for the rest of your life.
How to build credit with credit cards
Let’s make no mistake, used irresponsibly, credit cards are great way to mangle your credit score and put yourself in a financial hole. But there are many benefits that come with having and using a credit card. One of them is that a credit card can actually help you improve your credit score.
That may seem surprising at first, but it’s true. Credit rating agencies look over your credit history to determine your credit score and when they see missed payments, defaults and exceeded credit limits, they give you a lower score. But the opposite is true as well. When they see increasingly good credit behaviour, like consistently making payments on time, paying your balance in full and staying well within your credit limit, those same rating agencies will start to raise your credit score.
Here are a few pointers to help this process along:
- Keep your balance low – Yes, you have a new credit card, but don’t be tempted to go on an all-out spending spree. Use your card to demonstrate that you are borrowing responsibly: make sure not to exceed your credit limit and do keep your balance low. One thing that rating agencies look at is how much of your available credit you use. If you’re consistently using 95% of your possible credit, they don’t see that as a good sign.
- Make your monthly payments – Try to pay at least the minimum payment each month. If possible, pay your balance in full, because anything left on the card will incur interest. But whether you’re paying in full or paying the minimum, do make your payment on time.
- Be patient – We’re all dedicated to something at the start (just ask anyone who’s ever made a New Year’s resolution!), but don’t be tempted to slip up and miss a payment or overspend a few months down the line. The more consistent you are with your borrowing behaviour, the more likely your credit score is to improve.
These steps may seem simple, but following them diligently can be surprisingly helpful when trying to improve your credit.
Is a credit card for bad credit right for you?
This is a question that you’ll for sure have to answer for yourself. It’s not fun to have credit issues, but by being honest with yourself, you give yourself the best chance of improving your situation.
With that in mind, being on a low income, being a student, having previously had an IVA (individual voluntary arrangement), a CCJ (county court judgement) or having been previously declared bankrupt could all affect your eligibility when applying for a credit card. Some card providers are also wary of other factors such as not having a permanent UK address or being self-employed. If these are true of you, or if you simply have been unable to get accepted for standard credit cards, then a credit card designed for those with bad credit may be the right choice.
Credit-builder cards are designed for those with bad credit histories and will often consider your application even if you fall into one of the above categories. If you have been declared bankrupt, though, you often need to wait for a certain period of time before applying for a credit card.
Of course it goes beyond simply whether you can get accepted for a credit card. You also need to assess whether you can responsibly manage a credit card. If you can answer yes to both of the following, a credit card may be a good option for you.
- Will you always pay on time? – Falling behind on payments can have a huge impact not only on your budget (late payment fees are typically £12) but also on your credit score. Once you apply for a credit card, you will need to know that you can make the required payment by the card’s due date.
- Will you not carry a balance? – You can easily get in financial distress if you don’t pay your balance in full and are therefore charged interest. This is especially true on credit-builder cards, since they typically have very high interest rates. It is best to be conscious of how much you are putting on your credit card and how much you can realistically pay off each month.
If you have a poor credit history, a credit card could be a useful tool to help you improve it. If you can answer ‘yes’ to the two questions above and are confident that you can display good borrowing behaviour, then a credit card could provide a launch pad to improve your credit score.
In the market for a new credit card? Check out our featured rewards credit cards and start comparing today.
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Frequently Asked Questions
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There are three main credit rating agencies (CRAs) in the UK: Equifax, Experian and TransUnion. You can apply to check your credit score with all three. Some sites, like Clearscore (which uses Equifax’s data) offer services such as free access to your credit report for life. Alternatively, you can get free 30-day trials of more comprehensive credit-checking services from Experian and Equifax, which will include your full credit report.
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Each CRA has a different way of scoring consumers. Experian defines a score of anything below 720 as ‘poor’, for Equifax ‘poor’ is 379 or below, and TransUnion uses the grades of number 2 (‘poor’) or number 1 (‘very poor’).
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Your credit score is calculated from the following information.
- Your full name and date of birth
- Electoral roll information to confirm your current address and previous addresses
- All loans, credit cards and mortgage accounts
- Current account overdraft
- Previous application searches and footprints
- Joint accounts
- Any missed repayments and how frequent they are
- History of debt
- Information about whether your identity has been used for fraud.
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Yes, it is often still possible. But you need to carefully consider which card is right for your situation, and, if you do get approved, you need to be careful about how you use your card, so you don't harm your credit score further.
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It can be. Having many credit cards can make new lenders worried about the level of debt you could rack up very quickly. It can also be a temptation for you to overspend and build too much debt. But don't rush to close out accounts because of this, because having long-running accounts (in good standing!) show good credit behaviour over time. The percentage of your total credit that you utilise is also important for your score, and if you start closing down lots of accounts, that could make your credit utilisation rise.
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It's generally not ideal. And if we were chatting at the pub, I might ask you, 'Why are you applying for multiple credit cards?' The problem is that this may make it look to lenders like you're desperate for credit, which isn't a good look! In most cases, you'd be better off choosing a few cards that look like a good fit for you, using an eligibility checker to see which ones you'll likely be approved for and then applying for one.
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If you have bad credit, there are two main options you have to improve your chances of getting a credit card: only apply for cards you’re eligible for, and improve your credit score. Let’s look at these in more detail.
Applying for credit and being declined can knock your credit score even lower. Avoid this by only applying for cards you’re eligible for. Many lenders offer an eligibility checker on their website, so check before you apply. Credit builder (or rebuilder) cards are an easy way to get a credit card with bad credit—they’re designed for it. Unfortunately, with low limits and high interest rates, they can be a trap, so think carefully. Can you make your payments easily and in full every month? If not, then this type of card could make your situation worse. At the very least, when you apply for credit, don’t make life harder for yourself—ask the lender to do a soft search first. Soft searches don’t leave a record on your credit file, so they won't harm your score.
By far, the best way to improve your chances of getting a credit card is to improve your credit score. A credit builder card can help with that, as long as you make all your payments on time and keep your balance below 30% of your limit. Improving your credit score comes down to proving that you’re responsible with money, and you are who you say you are. Register for the electoral roll, pay your bills on time and (if you can) close joint accounts with people who have bad credit. If you rent your accommodation, ask your landlord to report your rent payments to The Rental Exchange Initiative or CreditLadder. As long as you’re consistent, your score will improve.
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Whether you should get a credit card if you already have a lot of debt depends on several factors that should all be considered when you make this decision. One factor is what you want the credit card for. If you’re already in debt, getting a credit card so you can continue spending will make your situation worse. However, if you want to consolidate your debts or transfer your existing balance to a card with a lower interest rate, a credit card may be a good choice.
Many credit cards offer a balance transfer. This means you can transfer your existing debts from other credit or store cards to the new card at a better interest rate—for a fee. The lower interest rate means more of your repayments go towards paying off your debt. However, the fee is usually a percentage of the debt transferred, so use a balance transfer calculator first to help you find a good deal.
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Making payments on time will improve your credit score, but it’ll take a while. Exactly how long it takes depends on your situation. Do you have a bad score because of bankruptcy or a court judgement? Did you miss a few bill payments? Max out your credit card? Or are you starting with a blank slate? In any case, it takes up to three months for companies to send information to the credit rating agencies. Until the agencies have the new information, your score definitely won’t change.
You can improve your credit score/. by adding positive information to your file, or waiting for negative information to expire. In general, most things stay on your file for up to 7 years. The good news is, unless you have something serious like bankruptcy on file, most lenders only look at the last 2 or 3 years. If you’re consistent with your payments, building a credit history from scratch or repairing it after a small mistake usually takes 3 to 6 months. The exact time depends on the credit agency.
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Closing bank accounts won’t make a difference to your credit score, but credit accounts might. When you close credit accounts, it looks to the credit rating agencies as if you’re using more of your available credit, so your credit score will probably take a short-term hit. However, if you do it right, it could improve your credit score in the medium-to-long term.
To come out of it stronger, plan ahead. Hold onto the accounts that help your credit score, and close the rest. Old accounts and accounts with high credit limits and low balances help, so hold onto them. But if you have lots of accounts of the same type, cut back on those—they can hurt your score. And make sure you keep the total balance across your remaining cards below 30% of your credit limit.
Once you’ve decided which accounts to keep, don’t close them all at once—spread it out over a few months. Before you close an account, make sure you cancel any direct debits or standing orders. Afterwards, don’t forget to check with your bank or lender that the account really is closed! If you do it right, your credit score will bounce back quickly.
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As always, it depends on your situation. If you already have some credit accounts and you’re paying your bills on time, it might be worth waiting a few months for your score to improve. Alternatively, if you don’t have any way to start building a good credit history, a credit builder card could help you—but only if you use it properly!
Credit builder cards have low credit limits and high interest rates. If you want to use one to improve your credit score, you’ll need to keep your balance below 30% of the credit limit and pay it off in full every month. Be honest with yourself about whether you can do that; if you can’t, you’ll end up with more debt and an even worse credit score than when you started.